What happened

Airline investors have been dealing with a lot of turbulence of late. After strong gains to begin 2021, the stocks have been selling off in recent days, and Tuesday was no exception. American Airlines Group (AAL 3.04%), United Airlines Holdings (UAL 2.75%), and Delta Air Lines (DAL 3.34%) all traded off nearly 5% or more for the day as investors continue to try to figure out how quickly a post-pandemic recovery will arrive.

So what

Airline stocks were among the big losers of 2020, with the pandemic all but wiping out demand for travel and putting the industry deep into the red. Airlines are still losing money, but a combination of government stimulus support for payrolls and strengthening demand as vaccines become more widespread has investors optimistic that the worst is now behind us.

A plane flies above the clouds.

Image source: Getty Images.

That led to a rally in recent weeks, with American at one point up 60% for the year and United up more than 40%. Those two airlines were considered more vulnerable in the early days of the pandemic and so fell further in 2020 than Delta, and in turn were enjoying more of a recovery rebound.

The logic behind the rally is sound. Transportation Security Administration screenings have been steadily climbing, and airlines in a recent round of investor presentations have signaled the worst is behind them. But the stocks seemingly have gotten ahead of the results, and some pullback was likely inevitable.

On Tuesday, markets were selling off on rising COVID-19 cases in parts of Europe, continuing uncertainty about the AstraZeneca vaccine, and comments by Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen saying they still see fragility in the economy. With so much uncertainty out there, investors are selling off airline positions as well.

Now what

A year ago, airline investors were bracing for bankruptcies. That risk faded a long time ago, and the industry is on the upswing.

Unfortunately, it is going to take a significant amount of time for these businesses to regain altitude. While tourist travel seems likely to recover by this summer, more-lucrative parts of the industry like international and business travel could take years to bounce back. These so-called legacy airlines also face a lot of revitalized competition from discounters, including the industry's first initial public offerings in years.

Delta is the most expensive of these three, trading at just over one times expected 2021 revenue. But it is also the safest bet, with a management team that thrived prior to the pandemic and a relatively healthy balance sheet.

The airlines are safe investments for patient investors, but anyone climbing on board now should expect a long, turbulent journey. Of the three mentioned here, I'd stick with Delta as the likely first to stabilize, though I still believe there are better, non-airline stocks to buy ahead of an eventual aviation recovery.